SENATE BILL NO. 366 An Act relating to medical support for children; allowing a member of the teachers' retirement system or the public employees' retirement system to assign to a Medicaid-qualifying trust the member's right to receive a monetary benefit from the system; relating to the effect of a Medicaid-qualifying trust on the eligibility of a person for Medicaid; relating to the recovery of certain Medicaid payments from estates and trusts; requiring persons who receive Medicaid services to be liable for sharing in the cost of those services to the extent allowed under federal law and regulations; and providing for an effective date. Co-chair Pearce directed that SB 366 be brought on for discussion and noted that a number of people had signed up to speak to the legislation. GARREY PESKA, representing the Alaska State Hospital and Nursing Home Association, first came before committee. He attested to concern regarding bill provisions relating to Medicaid co-pay since it is difficult to determine how the provisions will impact in-patient hospital services. The association has been told by the director of the division of medical assistance that, under federal law, the maximum allowable co-pay for in-patient services is 50% of one day's charges. Mr. Peska then advised that hospital representatives would speak to what that means for their particular facilities. BILL HARRISON, Chief Finance Officer, Alaska Regional Hospital, explained that concern relates to the fact that patients must meet a certain medical criteria in order to be classified as in-patients. If the purpose of the co-pay is to try to impact utilization, that outcome is not foreseen because a criteria review process is already in place. Cases are reviewed for necessity of the medical care received. Since this portion of Medicaid involves poor patients, there is a question as to whether they have any ability to make co-payments. Another side to the issue focuses on the fact that when co- payments are involved, hospitals incur administrative costs. Bills must be sent and payment may be as little as $5.00 per month over a substantial period of time. ROGER STONE, Chief Financial Officer, Ketchikan General Hospital, advised that the association is not totally opposed to the concept of co-pays. They do, however, need to be reviewed in the broader context of the entire Medicaid/welfare system. He noted that a single mother with two children receives approximately $910.00 a month in state assistance. A co-pay of $200.00 to $400.00 on an in-patient stay represents an unpayable amount for the recipient. Mr. Stone urged that co-pays be established at a reasonable amount. He acknowledged that the concept that everyone should pay for at least a portion of their care is probably good in the long run. Concern by the hospital association is that those who are already in dire straits will be forced into worse situations, and hospitals will be saddled with costly attempts to collect dollars that "are probably not collectible . . . ." Co-chair Frank acknowledged that 50% of the first day's stay would result in a "pretty healthy" co-payment for a patient only staying one day in the hospital. However, federal government payments of $1.00 or $2.00 are too small. He then asked for an explanation of the inconsistency in the two examples. Mr. Stone responded that he had not yet had an opportunity to conduct that type of review. He acknowledged that co-pay amounts stipulated in federal code are very small and almost not worth dealing with in terms of administrative costs. Senator Rieger noted earlier discussion of the bill relating to utilization control. He then voiced his understanding that the only control is an "after-the-fact" contract where a hospital billing is denied for a stay beyond the "median stay." No gatekeeping process is in place. Mr. Stone acknowledged the "length-of-stay" criteria. Ketchikan General has its own utilization management program. It is constantly reviewing "these cases to make certain that they do meet certain medical criteria." That is consistent among all patients. Mr. Harrison advised that a similar review process is in place at Alaska Regional for both before, during, and after a patient's stay, in particular with Medicaid. Under in-patient regulations and reimbursement criteria set by the division, a maximum amount of reimbursement for an in-patient stay is established. It is in the hospital's best interest to get patients in and out as quickly as possible. If the stay exceeds the maximum amount, no matter how long the patient is in the hospital, the hospital will not be paid "any more money." In response to further comments by Senator Rieger, Mr. Harrison said that financial inducement to discharge the patient sooner will not change the medical criteria. It remains to the physician to decide when the patient may be discharged. Co-chair Frank pointed to savings assumptions and noted the $100.00 deductible for in-patient care rather than 50% of the first day. He voiced need to work with the department to establish "something that would be reasonable." JON SHERWOOD, Division of Medical Assistance, Dept. of Health and Social Services, next came before committee. Speaking to questions regarding inconsistencies in co- payments, he explained that it reflects federal law. He acknowledged that he did not have background information on why the amount is so high for in-patient stays. Co-chair Frank asked if the co-payment could be structured so that one staying in the hospital a single day pays only $25.00 while someone staying longer would accumulate co-payments up to $100.00. Mr. Sherwood explained that maximum limits are based on the total unit of service, without regard to the length of stay. He said he could not say whether a sliding co-payment based on the number of days could be implemented, but he agreed to explore such an arrangement. Co-chair Frank advised he would work with the department and bring the bill back for further discussion at a later time. SB 366 was thus HELD in committee.